Perpetual No.1, but still lags ASX 300

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The investment team at Perpetual Trustees has done its best to
justify its whopping salary incentive scheme, outstripping returns
from other pooled fund managers last financial year.

But the stellar performance of Australian shares in the 2005
fiscal year meant even Perpetual underperformed the S&P/ASX 300
accumulation index for the year to June 30. Pooled funds have to
hedge their bets, diversifying their investment portfolio.

Perpetual's No.1 performance follows its second placing last
year and comes after it recently announced its top investment
managers were in line to receive up to $52.5 million in shares in
coming years, subject to performance criteria.

At the other end of the scale, Credit Suisse's Capital Growth
fund returned a miserly 8.4 per cent over the year to trail the
field while Colonial First State's Diversified fund, second last
for the second straight year, returned 10.6 per cent and HSBC's
Balanced fund returned 11.2 per cent. The median fund returned 13.1
per cent.

But all 29 fund managers in this year's Mercer survey
significantly underperformed the ASX 300 accumulation index, which
returned 26 per cent for the financial year.

"You shouldn't expect these diversified multi-sector funds to
perform exactly in line with the Australian market because they
obviously invest in other asset classes," said David Carruthers
from Mercer Consulting.

"They're trying to take a more diversified, slightly lower-risk
approach, so it's not all your eggs in one basket."

Mercer said that on average, the funds surveyed had 37 per cent
of their money in Australian shares, about 26 per cent in overseas
shares and 15 per cent in domestic fixed income.

Compared with the strong performance of Australian equities, the
MSCI world index, excluding Australian shares, returned just 0.1
per cent.

Mr Carruthers said the real return after inflation of the median
fund this year was 10.8 per cent compared with a 30-year average of
5.7 per cent.